BIR Ruling No. 006-14

January 9, 2014 BIR RULING NO. 006-14 RA No. 7279; BIR Ruling No. 109-13 Highland Ville Homeowners Association, Inc. Brgy. Lumbia, Cagayan de Oro City Attention: Rogelio R. Danuco President Gentlemen : This refers to the letter of Ma. Ana R. Oliveros, President of Social Housing Finance Corporation (SHFC) dated June 20, 2013, endorsing the sale transaction between OWEN V. ORTEZA, ARLENE O. THORNTON, ALMIRA MARIE O. ALQUITELA, ROMEO V. ORTEZA, OLIVIA O. QUIJANO, CARMEN MONINA V. TAMAYO; ELEANOR P. ROQUE, VICTOR ROY V. BALTAZAR (collectively, THE SELLERS) and HIGHLAND VILLE HOMEOWNERS ASSOCIATION, INC. (HOA-BUYER) for exemption from the payment of Capital Gains Tax and other taxes in accordance with the Republic Act (RA) No. 7279, otherwise known as the "Urban Development and Housing Act of 1992". Documents submitted disclosed that: OWEN V. ORTEZA, ARLENE O. THORNTON, ALMIRA MARIE O. ALQUITELA, ROMEO V. ORTEZA and OLIVIA O. QUIJANO are the registered co-owners of a parcel of land, identified as Lot 20421-B, Psd-104305-016646, being a portion of Lot 20421, Cad-369-D, covered by Transfer Certificate of Title (TCT) No. 137-2012009573 issued by the Registry of Deeds for the Cagayan De Oro City. The aforesaid property is situated at Brgy. Lumbia, Cagayan de Oro City with an area of Twenty-Seven Thousand Three Hundred Twelve square meters (27,312) more or less; CARMEN MONINA V. TAMAYO is the registered owner of a parcel of land, identified as Lot 20421-D, Psd-104305-016646, being a portion of Lot 20421, Cad-369-D, covered by TCT No. 137-2013000030 issued by the Registry of Deeds for the Cagayan De Oro City. The aforesaid property is situated at Brgy. Lumbia, Cagayan de Oro City with an area of Twenty-Seven Thousand Three Hundred Sixteen square meters (27,316) more or less; ELEANOR P. ROQUE is the registered owner of a parcel of land, identified as Lot 20421-A, Psd-104305-016646, being a portion of Lot 20421, Cad-369-D, covered by TCT No. 72250 issued by the Registry of Deeds for the Cagayan De Oro City. The aforesaid property is situated at Brgy. Lumbia, Cagayan de Oro City with an area of Thirteen Thousand Six Hundred Sixty Four square meters (13,664) more or less; and VICTOR ROY V. BALTAZAR is the registered owner of a parcel of land, identified as Lot 20421-C, Psd-104305-016646, being a portion of Lot 20421, Cad-369-D, covered by TCT No. 137-2012009553 issued by the Registry of Deeds for the Cagayan De Oro City. The aforesaid property is situated at Brgy. Lumbia, Cagayan de Oro City with an area of Twenty-Seven Thousand Three Hundred Fourteen square meters (27,314) more or less. TCDHIc HIGHLAND VILLE HOMEOWNERS ASSOCIATION, INC. (TIN 426-690-805-000),on the other hand, is a homeowner's organization duly registered with the Housing and Land Use Regulatory Board (HLURB) under Registration No. 12149 dated August 15, 2012. On January 21, 2013, the parties executed a Deed of Absolute Sale whereby THE SELLERS collectively transferred and conveyed Forty Thousand Nine Hundred and Thirty-Three (40,933) square meters of the aforementioned parcels of land to HIGHLAND VILLE HOMEOWNERS ASSOCIATION, INC. at an agreed aggregate price of Sixteen Million Three Hundred Seventy-Three Thousand Six Hundred Pesos (P16,373,600.00).Pursuant to the certification dated March 14, 2013 issued by SHFC, Forty Thousand Nine Hundred and Thirty-Three square meters (40,933 sq.m.) out of the total of Nine-Five Thousand Six Hundred Six square meters (95,606 sq.m.) covered by TCT Nos. 137-2012009573, 137-2013000030, T-72250, and 137-2012009553 actually comprise CMP Projects and shall be proportionately distributed to the association's qualified member-beneficiaries. 1 For this purpose, HIGHLAND VILLE HOMEOWNERS ASSOCIATION, INC. secured a housing loan under the Community Mortgage Program (CMP),a financing assistance program of the SHFC a subsidiary of the National Home Mortgage Finance Corporation (NHMFC). In support of its request, HIGHLAND VILLE HOMEOWNERS ASSOCIATION, INC. has completely submitted on June 28, 2013 the following documents: 1) SHFC letter application for tax exemption; 2) Certification of the President of the SHFC that the subject property qualifies and is actually a CMP project; 3) Certified true copy of the Letter-Guaranty; 4) Certified true copy of the Deed of Absolute Sale to the Community Association; 5) Certified true copy of the Articles of Incorporation of the Community Association; AaIDHS 6) Certified true copy of the Masterlist of Qualified Beneficiaries duly certified by the SHFC; 7) Certified true copies of the TCT and Latest Tax Declaration of the Property Sold to the Community Association; 8) Certified true copy of the Location Plan of the Lot Sold to the Community Association; 9) TIN NUMBERS/BIR Certificate of Registration of the sellers and the Homeowner Association; and 10) Other pertinent documents. In reply, please be informed that pursuant to Section 32 of RA No. 7279, pertinent portions of which state that: "Sec. 32. Incentives . To encourage its wider implementation, participants in the CMP shall be granted with the following privileges or incentives: xxx xxx xxx (b) Properties sold under the CMP shall be exempted from the capital gains tax; and" the landowners who sold their properties for use under CMP in a socialized housing project are exempt from the payment of capital gains tax. Such being the case, the sale by THE SELLERS to HIGHLAND VILLE HOMEOWNERS ASSOCIATION, INC. of Forty Thousand Nine Hundred and Thirty-Three square meters (40,933 sq.m.) portion thereof of the properties covered by TCTs No. 137-2012009573, 137-2013000030, T-72250, and 137-2012009553 is exempt from the capital gains tax. Upon issuance of this letter of exemption, and upon registration of the document of sale, a lien on the Certificate of Title of the land to be issued in the name of the Homeowners Association shall be caused to be annotated by the Register of Deeds having jurisdiction over the property, to the effect that the said property shall be used for socialized housing pursuant to RA No. 7279. (BIR Ruling No. 109-13 dated March 21, 2013) ISDCaT However, the documentary stamp tax is not one of the taxes covered by the tax exemption clause in Sec. 20 of RA 7279. Accordingly, the owner is liable to pay the documentary stamp tax on the documents conveying the afore-stated property imposed under Section 196 of the Tax Code of 1997, based on the consideration contracted to be paid for such realty or its fair market value determined in accordance with Section 6 (E) of the said Code, whichever is higher. (BIR Ruling No. 109-13 dated March 21, 2013) It is, however, understood that this ruling is never intended and shall not be construed as giving authority to the concerned Register of Deeds to effect transfer of the land title in the name of the buyer without the necessary certificate of authority to register issued by this Bureau. In this regard, this ruling shall be presented to the Revenue District Office (RDO) concerned in order for the latter to issue the Certificate Authorizing Registration (CAR).The CAR shall only be issued after the submission of the requirements provided under RMO 15-2003. Notwithstanding the foregoing, the Bureau of Internal Revenue shall conduct verification and post-audit that the actual occupants of the property transferred under the CMP are qualified beneficiaries and therefore, the seller is entitled to exemption from capital gains tax or income tax imposed under the Tax Code of 1997. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. cCAIES Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX Highland Ville Homeowners Association, Inc. Brgy. Lumbia, Cagayan de Oro City Name of Beneficiary Lot Allocation No. Last Name First Name M.I. Blk. No. Lot No. Total 1 Calacat, Joy V. 1 1 165.25 2 Pasures, Loida V. 1 2 165.25 3 Nambatac, Leoneda C. 1 3 165.25 4 Pabillaran, Uzziel N. 1 4 165.25 5 Noble, Susana M. 1 5 165.25 6 Balani, Ed C. 1 6 165.25 7 Dologuin, Emilyn H. 1 7 165.25 8 Bahian, Gina B. 1 8 165.25 9 Bahian, Janeth V. 1 9 378.42 10 Cabaraban, Lelebeth C. 1 10 165.25 11 Serio, Miguelito C. 1 11 165.25 12 Serio, Miguel Jr. E. 1 12 165.25 13 Roxas, Emerly C. 1 13 165.25 14 Roa, Wilma T. 1 14 165.25 15 Pendringuez, Merlina A. 1 15 165.25 16 Bahian, Ernesto Y. 1 16 165.25 17 Catarong, Aileen G. 1 17 165.25 18 Condes, Rodelo O. 1 18 165.25 19 Rodriguez, Benjamin N. 1 19 165.25 20 Rodriguez, Elsie P. 1 20 165.25 21 Waslo, Jubeth A. 1 21 247.87 22 Ligas, Jovita A. 1 22 252.83 23 Evaning, Evangeline V. 1 23 165.25 24 Babia, Joann M. 1 24 165.25 25 Panuayan, Juvy Mae O. 1 25 165.25 26 Perez, Kevin C. 1 26 165.25 27 Casil, Edgardo L. 1 27 165.25 28 Obafial, Rhenan B. 1 28 165.25 29 Gabriel, Helena G. 1 29 165.25 30 Debang, Lobemina V. 1 30 168.55 31 Vercede, Jonalyn B. 2 1 170.21 32 Gabule, Almario A. 2 2 173.51 33 Sasan, Juanito R. 2 3 165.25 34 Montao, Thom B. 2 4 173.51 35 Nueza, Reggie 2 5 165.25 36 Cadorniga, Lonisito K. 2 6 173.51 37 Buenaflor, Teofista W. 2 7 165.25 38 Lula, Natchel C. 2 8 173.51 39 Waslo, Noel M. 2 9 165.25 40 Bucod, Josie Y. 2 10 173.51 41 Yecla, Avelina A. 2 11 165.25 42 Payla, Nancy M. 2 12 173.51 43 Mabayla, Cristopher C. 2 13 165.25 44 Catamco, Jofredo P. 2 14 173.51 45 Golobio, Bobby E. 2 15 165.25 46 Paclibar, Arnulfo C. 2 16 173.51 47 Deso-Asido, Telesforo D. 2 17 165.25 48 Calibo, Jackie Lou S. 2 18 173.51 49 Valles, Hazel M. 2 19 165.25 50 Galarrita, Elinito C. 2 20 183.43 51 Golobio, Jemie L. 2 21 165.25 52 Razon, Evelyn R. 3 1 194.99 53 Vallin, Deovilyn M. 3 2 173.51 54 Vergara, Ledio Jr. A. 3 3 165.25 55 Luzon, Angelie P. 3 4 170.21 56 Nacaytuna, Marlon G. 3 5 166.90 57 Hosea, Cristobal C. 3 6 166.90 58 Yaes, Giannie C. 3 7 170.21 59 Galendez, Ferdinand L. 3 8 168.55 60 Dapanas, Mark B. 3 9 173.51 61 Detablan, Dante B. 3 10 171.86 62 Vallin, Ma. Ana G. 3 11 176.82 63 Cainoy, Helen Grace S. 3 12 173.51 64 Burgos, Michael Joe B. 3 13 180.12 65 Golobio, Roger L. 3 14 176.82 66 Ancheta, Nathaniel B. 3 15 183.43 67 Bucayong, Joffrey A. 3 16 178.47 68 Penaso, Eddie E. 3 17 185.08 69 Cabactulan, Mary Joy M. 3 18 181.77 70 Baquero, Ma. Teresa A. 3 19 188.38 71 Abrina, Arlene C. 3 20 183.43 72 Julian, Melvic C. 3 21 191.69 73 Bautista, Leovin Jr. L. 3 22 186.73 74 Aranzo, Charles G. 3 23 224.74 75 Bautista, Jenny L. 3 24 155.33 76 Billiones, Mary Jean E. 4 1 132.20 77 Ello, Elsie A. 4 2 132.20 78 Gumban, Hylene B. 4 3 132.20 79 Gumahad, Giema G. 4 4 132.20 80 Tuazon, Ann Harsen V. 4 5 132.20 81 Manloza, Norilyn V. 4 6 132.20 82 Vergara, Judith Irene D. 4 7 132.20 83 Tahud, Melissa C. 4 8 132.20 84 Yap, Jason V. 4 9 233.00 85 Caitor, Belen S. 4 10 214.82 86 Dablio, Lady Mae D. 4 11 132.20 87 Casagda, Noel C. 4 12 132.20 88 Dumale, Raul B. 4 13 132.20 89 Arellano, Virgelio D. 4 14 132.20 90 Laguit, Medelin E. 4 15 132.20 91 Gonzaga, Feliciana T. 5 1 155.33 92 Adarne, Loida G. 5 2 175.16 93 Penales, Solomon G. 5 3 148.72 94 Acain, Jennife E. 5 4 148.72 95 Cimafranca, Yoliza G. 5 5 148.72 96 Avila, Haydee C. 5 6 148.72 97 Hilarion, Elsie M. 5 7 148.72 98 Besin, Catherine A. 5 8 148.72 99 Gumahad, Danny G. 5 9 150.38 100 Magsayo, Alpha S. 5 10 148.72 101 Lubguban, Judith R. 5 11 178.47 102 Boborol, Evangeline P. 5 12 148.72 103 Jerusalem, Enelyn G. 6 1 152.03 104 Navarro, Claudia L. 6 2 171.86 105 Lacayanga, Evangeline C. 6 3 148.72 106 Ebdao, Catherine N. 6 4 148.72 107 Laureles, Marivic A. 6 5 148.72 108 Abuhan, Vizminda R. 6 6 148.72 109 Loyola, Jeanet M. 6 7 148.72 110 Revecho, Lilian C. 6 8 148.72 111 Pil, Nilda A. 6 9 148.72 112 Morales, Esterlina T. 6 10 148.72 113 Eng, Annabel E. 6 11 170.21 114 Tagle, Shenna S. 6 12 148.72 115 Ugay, Norberto T. 7 1 150.38 116 Flores, Ricardo Jr. M. 7 2 170.21 117 Taclindo, Ritchell N. 7 3 148.72 118 Manabat, Juvy Mae F. 7 4 148.72 119 Arnado, Editha S. 7 5 148.72 120 Flores, Junrey G. 7 6 148.72 121 Daison, Josephine B. 7 7 148.72 122 Manalo, Marilou F. 7 8 148.72 123 Buado, Zingy N. 7 9 148.72 124 Decipolo, Geraldo H. 7 10 148.72 125 Sajulga, Ulyses C. 7 11 170.21 126 Joromo, Jerson C. 7 12 148.72 127 Vergara, Relanie B. 8 1 147.07 128 Lomod, Jesusa G. 8 2 166.90 129 Granada, Liezel L. 8 3 148.72 130 Husain, Jonathan A. 8 4 148.72 131 Pagaray, Felix R. 8 5 148.72 132 Ginemelo, Ignacia P. 8 6 148.72 133 Pasco, Alejo Jr. B. 8 7 148.72 134 Jamaca, Nulwida A. 8 8 148.72 135 Progella, Hiyas B. 8 9 148.72 136 Cuyacot, Theceil R. 8 10 148.72 137 Awiten, Ma. Lorna S. 8 11 170.21 138 Paduga, Mary Joy C. 8 12 148.72 139 Caballero, Madilyn M. 9 1 147.07 140 Rabanes, Eleasita S. 9 2 169.90 141 Mejia, Evangeline G. 9 3 148.72 142 Luzon, Alfredo P. 9 4 148.72 143 Dologaog, Hazel T. 9 5 148.72 144 Ampong, Matilde M. 9 6 148.72 145 Abalde, Ramon M. 9 7 148.72 146 Villena, Bryan S. 9 8 148.72 147 Opog, Analyn M. 9 9 148.72 148 Golobio, Edwin T. 9 10 148.72 149 Asoy, Armando Jr. M. 9 11 166.90 150 Asoy, Virginia M. 9 12 145.42 151 Busig, Josie B. 10 1 132.20 152 Ebsolo, Joan Dale C. 10 2 132.20 153 Novo, Ronamay D. 10 3 132.20 154 Janubas, Julius G. 10 4 132.20 155 Raluto, Marilou T. 10 5 132.20 156 Rico, Bella G. 10 6 132.20 157 Pajo, Rebecca G. 10 7 132.20 158 Delizo, Raynaldo N. 10 8 132.20 159 Paeste, Roberta L. 10 9 132.20 160 Balahay, Maria Fe P. 10 10 132.20 161 Magria, Gina S. 10 11 140.46 162 Tayor, Donna Mae D. 10 12 132.20 163 Tayor, Lorna L. 10 13 132.20 164 Solis, Arvin L. 10 14 132.20 165 Solis, Teodulo Jr. L. 10 15 132.20 166 Tadlas, Bije L. 10 16 132.20 167 Tadlas, Mary Jane L. 10 17 132.20 168 Calibay, Marialyn C. 10 18 132.20 169 Caralde, Jorem T. 10 19 132.20 170 Gallentes, Roxanne Paula P. 10 20 132.20 171 Lacturan, Marben P. 10 21 175.16 172 Naul, Teresita G. 10 22 175.16 173 Ramao, Mayflor C. 10 23 148.72 174 Tumala, Marlon L. 10 24 148.72 175 Gomez, Mellanie T. 10 25 148.72 176 Gomez, Nehmer Lou T. 10 26 148.72 177 Mocorro, Ed Matthew T. 10 27 148.72 178 Mocorro, Ed Nathaniel T. 10 28 194.99 179 Mocorro, Steven T. 10 29 194.99 180 Platino, Antonio A. 10 30 132.20 181 Pamin, Redgenald A. 10 31 132.20 182 Sagun, Fabian B. 10 32 132.20 183 Umapas, Aldin L. 10 33 132.20 184 Abecia, Annaliza A. 10 34 132.20 185 Camiguin, Liely N. 10 35 132.20 186 Alejo, Chuche Fe A. 10 36 132.20 187 Basallo, Anna Patria L. 10 37 132.20 188 Patriarca, Mime M. 10 38 132.20 189 Kelly, Nellybeth C. 10 39 132.20 190 Osa, Jessie N. 10 40 132.20 191 Borres, Leo James S. 10 41 132.20 192 Galupo, George P. 10 42 132.20 193 Diana, Marisol N. 10 43 132.20 194 Caliente, Arvin E. 10 44 132.20 195 Bete, Elsie O. 10 45 132.20 196 Trinidad, Delfin P. 10 46 132.20 197 Romero, Monica P. 10 47 132.20 198 Biwang, Lovelin G. 10 48 148.72 199 Biwang, Marlo G. 10 49 165.25 200 Biwang, Virginia G. 10 50 166.90 201 Hubagar, Lorna P. 11 1 140.46 202 Ruben, Lorilyn A. 11 2 140.46 203 Camasura, Erlinda C. 11 3 148.72 204 Lizada, Marilou D. 11 4 148.72 205 Galarosa, Danilyn C. 11 5 148.72 206 Dagaraga Perla B. 11 6 148.72 207 Pagaspas, Aladin A. 11 7 148.72 208 Baasia, Ma. Delia C. 11 8 148.72 209 Flores, Marites M. 11 9 148.72 210 Arado, Domingo D. 11 10 148.72 211 Taglinao, Joseph S. 11 11 148.72 212 Olasiman, Gerardo L. 12 1 165.25 213 Balanay, Annie Lyn O. 12 2 272.66 214 Baguhin, Flavier R. 12 3 166.90 215 Peas, Flordeliza W. 12 4 148.72 216 Ampong, Nelly B. 12 5 168.55 217 Lagumbay, Rufina E. 12 6 148.72 218 Mingo, Ronilo C. 12 7 166.90 219 Mingo, Remelie C. 12 8 148.72 220 Salibay, Nena D. 13 1 133.85 221 Danuco, Rogelio R. 13 2 175.16 222 Manggol, Sheila D. 13 3 132.20 223 Andico, Joan D. 13 4 132.20 224 Akut, Richard S. 13 5 132.20 225 Batedio, Joel D. 13 6 132.20 226 Jamison, George S. 13 7 132.20 227 Delima, Helen B. 13 8 132.20 228 Jamison, Lorey M. 13 9 132.20 229 Del Rosario, Edwin B. 13 10 132.20 230 Resmeros, Elenica C. 13 11 132.20 231 Requeso, Martino Jr. A. 13 12 132.20 232 Loquente, Desiderio C. 13 13 132.20 233 Monterola, Anecito B. 13 14 132.20 234 Magsayo, Josephine L. 13 15 132.20 235 Ompoc, Annabel M. 13 16 132.20 236 Magsayo, Jerry L. 13 17 132.20 237 Villamero, Fernando C. 13 18 132.20 238 Manalocon, Alexander N. 13 19 193.34 239 Calibo, Novie N. 13 20 181.77 240 Calamba, Gerard M. 14 1 132.20 241 Pagtulon-An, Glenda A. 14 2 193.34 242 Faburada, Albert R. 14 3 160.29 243 Amparo, Nathalie L. 14 4 156.99 244 Torres, Jesus C. 14 5 156.99 245 Asne, Gladys B. 14 6 153.68 246 Ensomo, Nilyn P. 14 7 153.68 247 Abellanosa, Rosarie Marie N. 14 8 148.72 248 Galupo, Jenneifer P. 14 9 148.72 249 Adecer, Norma Z. 14 10 145.42 250 Colaste, Reggie H. 14 11 145.42 251 Apa-Ap, Jocylyn A. 14 12 140.46 252 Estomo, Marjorie T. 14 13 142.11 253 Large, Ma. Veronica I. 14 14 137.16 254 Sabio, Ruzzen Marie M. 14 15 138.81 255 Andilab, Albert P. 14 16 133.85 256 Aranza, Jungy A. 14 17 135.50 257 Alinsugay, Karl Marx P. 14 18 128.89 258 Sabanto, Cherry Mae B. 14 19 130.55 259 Estrada, Lune F. 14 20 125.59 260 Laguidao, Rex G. 14 21 166.90 261 Alocillo, Betty A. 14 22 148.72 262 Oller, Rene C. 15 3 130.55 263 Bombeo, Riole John G. 15 4 130.55 264 Manginsay, Jairus Welmer C. 15 5 130.55 Total CMP 40,934.00 ======== Footnotes 1. See Annex for the masterlist of qualified beneficiaries.